Selling a Home

homeowners insurance refund check

Getting Your Homeowner’s Insurance Refund

No one likes to leave money on the table at the end of a real estate transaction. During the sale process, home sellers can get so focused on the big items like purchase price, inspection items and closing costs they miss the smaller items that can actually enhance their bottom line as well.

One of the most overlooked items in this category is homeowners insurance. This is because so few homeowners understand how homeowners insurance works and more importantly what happens to the policy when they sell their home.

If you had a mortgage on your home, you also had a homeowners insurance policy that would have been required by your lender. Additionally, unless you made a substantial down payment, more than 20%, your mortgage lender would have paid your insurance and taxes through an escrow fund they set up.

If you remember when you purchased the property, there was a category of closing costs referred to as “Prepaids”. The first year of Property Insurance was included in this category.

Each month when you made your payment a small portion went towards the next year’s homeowners insurance policy, that money was deposited into the escrow account that your lender maintained. Annually when these expenses came due, your lender paid them for you.

There are essentially two categories of insurance monies. The first is what you’ve paid into your current years escrow account. After the sale of your home, your lender should automatically mail you a refund check for the monies still sitting in your escrow account. That check usually arrives within 3-6 weeks of closing.

The second type of money is what you have already prepaid. The insurance company already has this money. When you sell your home, there will most likely be a surplus of funds from months you won’t own the house.This surplus is what you are looking to get back from the insurance company.

Example, if your homeowners policy begins every November 1st, then your annual premium is paid at that time, for the upcoming 12-months. If you sell your home six months later, you have only used six months worth of your policy. Since you have already paid for the entire year, a refund is now due for the unused portion.

In order to get this money, you are going to need to actually cancel the Homeowner’s Insurance policy. If you do not actually cancel the policy, then the premium already paid will not be refunded.

    1. Determine your mortgage anniversary date-This is generally your closing date. Find your original closing documents. If you can’t find your closing documents, your Realtor can help you find these documents as well as Supply you with your closing date.
    2. Check your escrow account– Do this to see how much you paid your insurance company check your statement or online portal for your account.
    3. Calculate the unused portion of your policy based on your closing date-You do this by taking the total policy amount paid (#2) and dividing it by 365 days, this will give you your per day policy rate. Now add up them remaining days in the year after your closing date. Multiply this number by your per day policy rate
    4. Contact your insurance provider– To cancel policy and initiate the cancellation and refund
    5. Keep your Personal Property Covered-Don’t forget to make sure you have some kind policy in place to cover your personal property.

The insurance company has to be notified in order to cancel the policy. Once you do that, they have to refund the portion of the year’s policy which you did not use.

You should call your insurance Agent or Carrier’s Customer service line. Each company handles cancellations differently. Some might ask you to sign a document, formally indicating the desire to stop coverage while others might want you to write a letter stating your intent.

While you’re on the phone, it’s also a good idea to discuss coverage options for your personal property during the moving process. Unless you have a specific policy in place, once the homeowners policy goes away, so does the coverage on your personal property. Moving and storing stuff often leads to unexpected damages, so it’s best to have some type of coverage in place to protect your property.

If you have any other questions, feel free to give me a call.

firstimpression

Putting Your Home on the Market: Making a Great First Impression

Our Springs Homes agents work with a lot of Home Buyers and subsequently, show a lot of properties. This experience makes them an invaluable resource, especially when it comes to advising Home Sellers on how Buyers think, what they see, how they react and how you can make a great first impression when they tour your home for the first time. Especially when if you’re considering putting your home on the market.

We asked a couple of our agents to share something that Home Sellers often overlook or forget to take care of prior to allowing their home to be shown. In other words, what turns off potential Home Buyers during the critical first impression of the home?

Pet Evidence

Nicole Happel:
One detail Sellers often overlook is the importance of removing pet evidence before a showing. Colorado Springs is known for being a dog-friendly city, so most folks here appreciate fellow pet owners. But when those folks are buying a home they do NOT appreciate your dog beds covered in fur, dog slobber on your sliding glass door, claw scratches on your hardwood floors, toys and food bowls in the middle of the kitchen, and especially doodies in your yard (however small).

When a Buyer walks into a home that screams DOG they are pretty grossed out. And then they wonder how much cleaning will be needed in order to make the home sanitary and livable according to their standards.

It seems this culture of “accept our pets” transcends into all price ranges too. I’ve seen some high-end homes which reek of dirty dog. And Buyers are not only turned off by your home, but they begin to question me as to why I would even consider showing them this home. It’s embarrassing to walk into a “dog overload” situation having not seen it coming. And of course, sometimes this stuff isn’t obvious in the online pictures we see prior to showing.

I know it’s a hassle as Sellers, but dog owners have to stay on top of such things while selling. If you don’t, it just might cost you that one solid Buyer. Just sayin!

 

Don’t Slam the Door on a Sale

Jennifer Boylan:
This one seems really obvious and simple, but I’m constantly amazed when a Home Seller completely ignores the front door and entry to the home.

When I walk up to a house with a nasty door or entry with Home Buyers in tow, I say “I hope this isn’t foreshadowing”. A nasty entry and doorway puts the prospective Buyers on alert. It’s like from that point forward they’re looking for problems.

  • The solutions are really simple but require a little attention and time:
  • If the front door is chipped, peeling or faded, paint it.
  • If the doorbell is broken and/or has a hole thru the button, replace it.
  • Check to make sure all glass is clean
  • Repair any broken glass or shutters
  • Replace or repair torn or worn-out screens. Ace True Value Hardware stores here in Colorado Springs make this really easy.
  • Make sure the path to the door is clear; no dirt, trash, toys, newspapers or other obstacles.
  • In the wintertime, make sure the sidewalk and entry are shoveled and clear of snow and ice
  • Add some plants, even if they’re fake. The Buyers usually don’t notice if they are real or artificial and if they do, it still shows that you care.

If you make the entry to the property appealing, you’ve done your best to start out on the right foot. This is just a smart move regardless of what condition the real estate market is in.

 

You Never Get a Second Chance

Brooke Mitchell:

One of the biggest things homeowners overlook when it’s time to sell… and I know it sounds cliché… is curb appeal. I firmly believe that “You never get a second chance to make a first impression!” I’m going to address curb appeal, and a bit more.

Dead or overgrown grass & shrubbery looks like a lot of work to first-time homeowners, so spruce up that front yard. Clean weeds out of rock & mulch beds.

  • According to a variety of experts, front doors tend to yield around 100% return on investment, one of the highest percentages for a minor home improvement. Imagine if you didn’t even need to replace it, but merely give a fresh coat of paint. Pick a neutral or trendy color.
  • Clean windows and glass doors are also in this curb appeal category. It makes your home feel fresh from the outside and helps you enjoy the sunshine while inside! I can’t believe how inexpensive a good thorough window cleaning can be. Once inside (I know this extends beyond curb appeal, but work with me here), Buyers will see the details that you have grown accustomed to while enjoying your home.
  • Worn flooring or carpet that needs to be stretched is distracting to the Home Buyer. First of all, we understand you live here, and it’s a royal pain to move your furniture out, but in the end, it will be worth it. Buyers will discount your home or overestimate the cost of this repair, so it’s better not to give them an opportunity to object. Replace the flooring or stretch the carpet.
  • Smells… pee-ew! When we sold our second home, we’d just had our first child. Sadly, we had grown immune to the grotesque diaper genie smell. Once it was pointed out in a feedback form we got it OUT of the house. Other smells can turn a Buyer off as well. You may have a litter box, but non-pet-owners can smell that ammonia scent right away. Buyers automatically assume it’s in the carpet, pad, sub-floor, floor joist, the room below… okay, I’m kidding, but seriously consider replacing flooring. Again if it’s something you live with all the time, you may not notice.
  • Pet hair and messes. It’s hard for pet owners to not become unaware of the pet hair in their lives. But again for Buyers who don’t own pets or those with allergies, this is an issue. Get a complete professional cleaning, and maybe put Fido in the kennel the first week you have the house on the market. Side note – the barking dog, even safely kenneled in garage or basement bedroom makes some people very nervous and on-edge, so they don’t have a warm feeling when viewing your home. Some people are flat-out afraid of dogs, no matter how small or far away they are.
  • It’s nice if you can “stage” your home. You don’t need a professional; just tidy up, thin out closets, slim down on excessive family photos and personal (religious, political, hunting) décor.

When you list your house, as a Seller, be Switzerland… neutral, lacking strong opinions displayed around your home. Based on our experience, we have far more detailed help that we are happy to share when you’re ready to list. Let us know how we can help!!

 

Smell Ya Later!

Maggie Turner:

Having one answer to this question is tricky. I’d say for first impressions, smells are the most important thing that Home Sellers can overlook. If a Buyer walks into a home and smells something bad, it’s an immediate turn-off. Bad smells create red flags and cause concern for lack of cleanliness, maintenance and overall care of the home. If a Buyer walks into a warm and inviting scent, it’s a pretty good sign that the home is cared for.

I was recently showing homes to an experienced and savvy Home Buyer. We went into a great property and I thought for sure this is “it”. The Home Sellers had left the trash in the kitchen trash can a little too long. There was an odor of decomposing something emanating from the can, it was pretty bad. The Buyer wouldn’t even consider the home and we left immediately. As we continued to look at other less ideal homes, I kept trying to bring her back around to what she now referred to as the “Stinky House”, but there was no interest. I kept thinking to myself, “whatever was stinking up the kitchen just cost the Home Sellers a sale”.

Oftentimes we get really used to smells in our day to day environment. If you question if your home has offending odors, an easy solution is to ask a friend to come over, walk through the home and be honest with you about what they smell in the home.

 

The Big 3-D’s

Kelly Raffelli

Decluttering, De-personalizing and Deep cleaning are the big 3-D’s when getting ready to put a house on the market. A Seller should give potential Buyers the opportunity to see a blank canvas. I recently was showing a house to a client and the downstairs family room was so entrenched with memorabilia and family photos, the entire conversation while we were down there was about that family and all of their stuff. That is NOT what you want the Buyer to be focused on. You want a Buyer to walk in and picture their own family pictures, decor, and life happening in that family room.

It can be hard to declutter and de-personalize, but the more you do you create an opportunity for the Buyer to “paint their lives” on the blank canvas and see themselves living in the home. Sellers don’t want Buyers distracted when they arrive for a showing. They want them focused on the question, “is this the right home for me?”

Deep cleaning is equally important and relatively straightforward. Buyers need to see the home in it’s very best condition. Sellers have to bring their “A Game” when presenting their house to potential Buyers. A deep clean and some light touch-up paint and other small repairs will go a long way to getting your home sold quickly and for the highest dollar.

Don’t Forget the Garage

Joe Boylan
For me, the garage almost always tells the truth. At least when it comes to getting an idea of how the home has been maintained. If The garage is a total mess, packed to the ceiling with boxes and junk, I always figure that the well-staged interior is just a facade. Now, if the garage is neat clean and well organized I always assume (right or wrong) that the house has been well maintained. If this is not the case, we find out at the inspection.

Take the time to clean out your garage, it’s worth the price of a storage space for the time your home will be on the market. Matt Casady from STOR-N-LOCK has some great suggestions about how self-storage services like his can be a huge help.

Most storage units in Colorado Springs can be rented on a month-to-month basis so you can use it for as long or short as you need without being locked into a contract which makes it a great option as a Home Seller looking for a short-term solution. Plus, many local facilities offer move-in specials like one-month free (especially in the fall and winter when they’re less busy) so using the storage space is even cheaper upfront.

Storage units come in a wide variety of sizes with a variety of features so you can store nearly anything you need to there. If you’re just looking to tidy up your garage by getting rid of boxes or junk, a 5’x10’ or 10’x10’ storage unit would be sufficient. If you’re looking to remove clutter from around your whole home by removing excess furniture from multiple rooms, then you may need a larger unit like a 10’x20’ or 10’x30’ unit.

Plan what you’re going to be storing and how long you plan to store it before selecting your storage unit. For example, if you’re selling your home during moderate weather months like in the spring and would only need the storage unit at that time, then a non-climate controlled unit would probably work just fine. However, if you’re selling in the winter and the items you’re storing are more sensitive to temperature fluctuations like electronics or family heirlooms, then a storage space that is climate controlled/heated would be worth the extra few dollars a month.

If you know you’ll be keeping your stuff in storage more long-term while you move and get situated in your new home self-storage can be a great option as well. Many local facilities offer discounts to customers who pay 6-months or 12-months upfront so if you know you’ll be storing for a while that’s a great way to cut down on the storage costs.

Because of the wide variety of storage unit sizes and optional amenities (like climate control), there’s a storage space to fit really any need you have during your selling and moving process.

Just make sure your garage looks like a maintenance ninja lives in the house.

No matter what the condition of the market, there is always competition for the best Buyers.

Don’t fall into the trap of assuming everything sells for top dollar in a Seller’s market. There is always another house and more deals fall out in a hot Seller’s market than in a normal market. It’s in a Seller’s best interest to sell to the most motivated, best-qualified Buyer. One of the best ways to motivate a Buyer is by impressing them every time they see the house.

We hope you have found this information useful. If you have any questions, please feel free to contact any of our agents.

 

Additional Resources:

If there is one thing Realtors love to talk about it’s selling houses and what that takes. Here is some more great information on this subject from some of the best real estate bloggers around the internet.

shouldisellorrentmyhouse

Should I Sell or Rent my House?: Weighing your Options

You are a homeowner and for whatever reason, it’s time to move on. Maybe you’ve outgrown your house, perhaps there’s a new job waiting in another location or you’re just ready to move to a more appealing home in a different neighborhood. No matter what the reason, you are no doubt struggling with the question, should I rent or sell my house?

This decision often comes down to where you are in life and what your long terms goals are. If you don’t have a lot of cash reserves or investments, you might need the proceeds from the sale of your existing home to go towards the down payment on a new home. If on the other hand, you’re looking for investments, managing a rental property might be a great option for you.

Deciding Whether to Sell or Rent

There are a lot of different factors to consider before jumping into the world of rental property investing. Some of them are financial, while others have to do with the demands this type of investment can make upon your time and lifestyle.

Let’s take a look at the major considerations that will affect your decision.

Start with the money

Cash flow should be the primary focus when considering the financial side of the rental business. Just like it sounds this term describes how cash flows in and out of your accounts.

Cash can flow positive or negative, but for most people, positive cash flow from your rental property will be the goal.

There are rare exceptions to this principle, these exceptions usually involve taking losses for tax purposes, certainly not something most people are looking for.

The other reason you might consider taking the negative cash flow would be if you were pretty far into a 15-year loan. You would do this in order to pay off the house and own it free and clear.

Establishing Cash Flow

In order to establish cash flow, you’re going to have to do some estimating of both income and expenses. It’s important to be realistic about these numbers. When I work with a new property owner in our property management company, I tend to lean on the pessimistic side of these numbers.

If the property leases for more money and the expenses end up being less, our clients are pleasantly surprised.Click To Tweet

If the property leases for more money and the expenses end up being less, our clients are pleasantly surprised. If there is some kind of negative trend in the market, having forecasted from the worst case scenario means they’re less likely to get hurt. I suggest you do the same when making your estimations.

Your Property’s Income

Rental property income can come from a number of different sources. Some landlords offer various services and options to tenants for a fee. Services like landscape maintenance, cleaning and various insurance policies for late rent. It’s a good idea for the new landlord to keep it simple, this means using only the rent payment when calculating income.

Establishing Rental Rate

The first thing you need to establish is how much you can realistically lease your property for. You want to be realistic because you want the property to lease quickly, no matter what the condition of the rental market. Keeping it leased goes hand in hand with keeping the cash flow positive.

You have several options when it comes to pricing.

  1. There are free valuation websites like Zillow where you can get a ballpark idea of what your home could lease for. This gives you a starting point, but ultimately you’re going to want to do detailed research to get a more accurate estimation.
  2. You could ask a Realtor to do a rental analysis. They will most likely use data from the MLS (Multiple Listing System), this is a good option because the data is generally accurate and verified.
  3. Another option would be to do your own research by combing through sites that feature rental properties in your neighborhood. You can talk to neighbors in order to see what they know about rental prices as well as calling any “For Rent” signs to see what people are asking.
  4. Finally, you might use a property management company to manage the property. One of the primary services they provide will be pricing. Since they manage multiple properties and will usually have MLS access, their price is usually the most realistic.

I can’t stress enough how important it is to get the pricing right. Tenants tend to move in waves, this means they usually start looking 30 to 45 days prior to when they want to occupy. Additionally, they probably need to give notice to their current landlord. If you take the first couple of weeks testing your price, you may find your rental sitting vacant for a couple of months. This mistake will kill your cash flow.

It is important to be methodical about your pricing and please don’t use the ”This is how much I need to get method”. This method consists of the homeowner looking at their payment and adding a little profit in order to determine the rental rate. This doesn’t work because the market doesn’t care how much your payment is or how much profit you want.

Renters will be looking at everything available on the market. If your rental is overpriced they will more than likely politely pass leaving you clueless as to why they didn’t lease it. So, before you do anything else establish a fair market rental value for your property.

Your Property’s Expenses

Once you establish the fair market rental value for your property you can start to apply debits to that number in order to see if the cash flow will be positive. here is a list of expenses you’re going to want to use in order to figure out if this is going to work.

  • Mortgage: Add up your principal, interest, property taxes and insurance (landlord policy).
  • Taxes: You will need to pay federal income taxes on the net income (rent plus other money minus expenses) you receive from your rental property each year.
    • Each year when you file your tax return, you will add your net rental income to your income for the year, such as salary income from a job, interest on savings, and investment income.
    • Property Taxes were covered above in the Mortgage section. If you, not your lender make your own tax payments, you can add them here.
    • Owning a rental property allows you to make several tax deductions for things like interest and depreciation.
  • Operating expenses: This is a broad category
    • Advertising – Websites, Print, Social Media
    • Travel – Driving back and forth to the property
    • Cleaning and maintenance
    • Legal fees – Documents (leases, disclosures, etc.)
    • Credit and background checks
  • HOA Fees: If you live in a neighborhood that has an association you’re going to want to pay those fees yourself. Since late payments of HOA fees can bring serious consequences and fines, you don’t want to leave this one to the tenants. Having said this, you may want to roll the HOA cost into the rental rate.
  • Management fees: if you choose to use a property manager you will need to calculate their monthly fee along with any other additional fees into your expenses total. Using a property manager can eliminate other expenses along with a significant amount of time and hassle. if you are the least bit squeamish about dealing with tenants you owe it to yourself to talk to a property manager.
  • Commissions: if you or your property manager are putting the property into the MLS system for Realtors to show and help you lease, you’ll need to offer a commission which varies from area to area.

Once you’ve tallied all of your expenses and compared against the potential income you’ll receive from the property, you’ll have a better sense of whether or not renting versus selling is a good idea.

Your Time and Effort

In addition to the financial aspects, you should consider the effect managing rental properties will have on your personal life.

If you’re going to self-manage your rental property, you will need to handle the following:

  1. Advertising – The internet makes this a lot simpler than it used to be. You’ll still need to prepare ads, take photos, compile house details and post all of this information.
  2. Answering calls – No matter how automated you try to make the leasing process, tenants still want to talk to a human. They have questions and frankly, want to get a feel for what kind of person you are.
  3. Scheduling showings – Plan on showing the property at all times, even on evenings and weekends. People with 9 to 5 jobs are going to request this. In our experience, if someone is really looking for a house to rent they will carve out time during the day.
  4. Showing the property – This can actually be a lot of fun and it’s good to get to know your prospective tenants. One important word of warning don’t be wooed by their personality, you need to be objective and make your decision on the application and the data you get from that exercise. In other words, put a lot of weight on the tenant’s credit score, background check and references.
  5. Processing the application
    1. Pulling credit
    2. Checking background
    3. Calling References (previous landlords, employment & personal references)
  6. Preparing a lease – You can find a boilerplate lease online, but an even better idea is to contact a local real estate attorney and pay for a copy of their lease. Remember, every market is different and a local real estate attorney will most likely have a lease that takes into account aspects of your local market.
  7. Documenting the property condition – This is important because when your tenant moves out you need to be able to prove any damage claims you make against them prior to deducting any monies from their deposit. You want to avoid any opportunities for subjective opinions about property conditions and damages.
  8. Emergency Phone Calls – You should offer your tenants a way to reach you at anytime day or night in case of emergencies. To minimize these calls, it is a good idea to explain to the tenant who to call in case of certain types of emergencies. For example, in most cases, a gas leak should elicit a call directly to the gas company instead of the property manager.
  9. Ongoing maintenance- You’re going to want to make sure the property is regularly maintained. This means winterizing and de-winterizing sprinklers, cleaning and servicing the furnace and making sure smoke detectors and CO2 detectors are in proper working order. These items are important because carbon monoxide is so dangerous and landlords own much of a liability around it.
  10. Performing regular property inspections – Even the best tenants lose sight sometimes of the fact that this is your house. Regular inspections are necessary for a number of reasons:
    • Making sure all occupants are on the lease
    • Checking for unapproved pets
    • Verifying there are no illegal activities taking place
    • Checking for things like smokers in a non-smoking property
  11. Collecting Rent – This includes dealing with late and or unpaid rents.
  12. Evictions – The possibility of having to serve and process an eviction
  13. Preparing a property to release – At the end of the lease term, the property needs to be returned to a condition where it is ready to move into by another tenant. This can include:
    • Carpet cleaning
    • General cleaning throughout
    • Patch and paint of walls
    • Other maintenance items in the property
    • Rekeying of all locks
    • General landscape maintenance

Some homeowners have no problem with performing any of these items. But oftentimes, it is very time-consuming to find the right vendors and schedule all of the work to be completed in a timely and cost-effective manner. A property manager will handle all of this for the homeowner and this is one of the big benefits of using a property manager.

Other important reasons you might lease

You might consider renting your property if you have a desire to return to the area. Here in Colorado Springs, we often see military families that plan on returning to the area at retirement or when they’re through with their military service. For this reason, they will decide to put their home into a property management program or in some cases, manage themselves from a distance. The upside is that when they return they know exactly where they’re going to live. Additionally, pricing fluctuations don’t affect them as they don’t have to buy back into the market at a higher rate.

Another good reason to rent your home is the possibility of catching a rising equity tide. During the latest recession, we used a term referring to some of our homeowners as “accidental landlords”. These were people that were unable to sell their homes without writing a check and were not willing to walk away or go through the short sale process. These people put their homes up for rent and decided to weather the storm. Fast forward to the latest real estate boom, and many of these people have sold their homes at a tidy profit.

Some people have a genuine desire to own property and be a landlord. Every now and again you meet someone who just loves owning a lot of property and getting to know their tenants. They really don’t mind the hassles involved and always seem to be on the run and energized by what they do. Yes, these people exist but are rare.

The Upsides of Selling

You’re Done

Selling your home and walking away with a profit is a great feeling, especially in a seller’s market. Doing so can give you the flexibility to take advantage of other opportunities.

This money can potentially be a substantial amount of money which you might use this as a down payment on your next property. Many people love the prospect and the excitement of starting over in a new home.

Be aware that in an extremely hot seller’s market you will need to be able to find someplace to move to. Talk to anyone trying to buy in a hot market and you will soon learn about the stress and disappointment of navigating this type of market. This is a problem you don’t want to discover after your house is under contract.

Tax-free profit

If you’ve lived in your home for at least 2 out of the last 5 years prior to the sale, you may be eligible for an exclusion on any capital gains tax up to $250,000. If you are married and file jointly this amount doubles to $500,000 (2017). You’re not going to find a lot of other Investments that give you this kind of break.

Free Time

Handling a rental property as a homeowner takes a fair amount of time and effort. Re-read the section on Time and Effort and ask yourself if you are really ready to handle all of those responsibilities. Using a property management company alleviates most of these responsibilities, but selling your property alleviates all of the responsibilities once and for all.

Escaping Maintenance and Repairs

If your home is a maintenance nightmare, or in need of repairs, renting it out is probably a bad idea. The tenant will certainly expect the condition to be up to a livable standard. Repair requests will create a constant hassle and eat into your bottom line.

With a home in need of numerous repairs or remodeling, selling is most likely the best option. This allows you to deal with any repairs and deferred maintenance in one fell swoop, after the inspection and prior to closing. Once you negotiate those items, the maintenance and repair headaches are over.

Conclusion

This list will certainly get you thinking about the core issues that surround selling versus renting. Timing, lifestyle, income and a long list of other factors go into the decision to be a home seller or a landlord. This information should go a long way to get you pointed in the right direction.

As always, if you have any questions or help to get started selling or renting out your home, feel free to give me a call.

Additional Resources

Here are some helpful resources I used while putting this article together:

Converting Your Home To A Rental Property-Luke Skar

Should I Rent or Sell my House-Bill Gassett

Should I Sell or Rent My Home? Factors to Consider-Anita Clark

Pros and Cons to Selling a Tenant Occupied Property-Michelle Gibson

 

 

closing

Preparing for Your Closing – Checklist

You are getting ready to close on your house, but you realize that you may not be ready. Use this handy checklist to get all of your items ready for closing.

✓ Loan Payoff Information

If you have not already provided this information to your agent, our office will contact you regarding loan information. We will need the loan company, account number and the last 4 digits of your social security number(s).

✓ Prepare for the Home Inspection

The inspection is important for a number of reasons. The buyer will actually spend more time in the home during the inspection than they did during the actual showings. Please have your home in great condition for the inspection. Poorly staged or messy homes can quickly create buyer’s remorse.

✓ Inspection Items

In general, repair requests generated from the inspection will need to be done by a licensed contractor. We will assist in arranging contractors to repair the items.

✓ Receipts

Provide copies of all receipts at least 48 hours prior to the walkthrough to your agent.

✓ Prepare for the Appraisal

Your agent will arrange to meet the Appraiser at your home. Please leave the house in showing condition for the appraiser.

✓ Cancel Homeowner’s Insurance Policy

Please cancel effective the day after closing.

✓ Disconnect Utilities

Contact utility companies and arrange for transfer of service. Most companies will ask for the buyer’s name.

✓ Organize manuals

instructions, warranties etc. for the purchaser.

✓ Funds Notification

Let your agent know how you would like your funds.

✓ School records

Arrange to have the school records transferred to your child’s new school district and/or daycare.

✓ Veterinarian records

Arrange to transfer records to your new vet.

✓ Change Address

File a change of address. This can be done online at www.moversguide.usps.com

✓ Double Check House

Decide if you will keep your plants or give them away. Remember that plants cannot be loaded with your household goods.

✓ Remove Hazardous Wastes

Dispose of flammable, corrosive and poisons.

✓ Walk Through

Final Walk Through with Listing Agent.

✓ Confirm Closing

Check with your agent for date, time and location of closing.

✓ Photo ID

Bring valid Photo Id-Driver’s license or Passport is preferred.

✓ Keys and Garage Door Openers

Bring all keys, the garage door openers to closing.

Please do not leave items in the house you do not want or you do not know what to do with.

showings

Preparing for Showings – Checklist

Because first impressions are so important, it is essential that your home is in “show-ready” condition for each and every showing. Although it can be daunting at first, if you use this quick and easy checklist, you will have your home sparkling in no time. To make it even easier, get your family involved. Assign some of these tasks to other family members to do each morning so that you are prepared for any last minute showing.
Here is your checklist to run through before every showing:

✓ Open drapes, shades, blinds

✓ Turn on lights to make your home look bright and cheerful.

✓ Pick up shoes, toys and any other items that might be scattered around.

✓ Put any dirty dishes in the dishwasher and close it.

✓ Empty all trash.

✓ Wipe down all counter tops and tables.

✓ Make all beds.

✓ Run the vacuum.

✓ Put away all clothes.

✓ Make sure all dirty clothes are out of sight.

✓ Make sure rooms smell good, spray a deodorizer if necessary.

✓ Make sure any medications are out of sight.

✓ Turn oven on to 250 degrees. Put a small amount of vanilla extract on a piece of foil into the oven. This will simulate the smell of fresh baked chocolate chip cookies. Yummy!

✓ Turn off all televisions. You can play soft music at a low volume in the background only.

✓ Make sure all papers, mail, bills and other confidential materials are out of sight.

✓ Secure any jewelry, cash or other valuables.

✓ Adjust the temperature; make sure your home is warm in the winter and cool in the summer.

selling

Preparing for Selling – Checklist

Getting ready to sell your home can be an overwhelming task. There are things that a Realtor needs to know about your home in order to list your home with optimum efficiency and effectiveness. This information assists with pricing, communication, entering data into the MLS, generating a Comparable Market Analysis and scheduling showings. This step must come first prior to scheduling the photo shoot and marketing of your home.
Please gather this information and provide this to us as soon as possible.

✓ Home Documentation

    • Blueprints
    • Plat maps
    • Warranties
    • Schematics
    • Manuals
    • Survey
    • Improvement Location Certificate ILC

✓ Loan Information

    • Loan Company
    • Payoff Amount

✓ Contact Information for all Owners

    • Names, email and phone numbers

✓ HOA information

    • HOA contact information

✓ Appraisals

    • Any past appraisals

✓ Security System

    • Access codes for security system and system lease agreement

✓ Property tax information

    • Copy of your most recent tax information

✓ Utility Bills

    • Average utility bills for previous 12 months

✓ Special Features

    • Complete list of special features of your home

✓ Upgrades/Improvements

    • List of all improvements you have made to the property

✓ Keys

    • 2 sets of keys to the property
candles-stjoes

St. Joseph Statues and Other Tips To Make Your Home Sell Faster

In the world of real estate, superstitions abound.

Perhaps driven by sheer desperation, say, a house that’s been on the market for months and just won’t sell, or a home that’s in less-than-optimal condition, real estate agents and homeowners alike have been known to take some drastic measures.

Take, for example, the legend of St. Joseph. Over the years, St. Joseph has become the patron saint of real estate. Have a home that won’t sell? Simply head online, purchase a St. Joseph statue –they’re available for $9.95 –and wait for it to arrive in the mail. Once it shows up, you simply bury it in the yard, or, in a pot, if you’re in a condo or don’t have a yard, and wait for the statue to do its work. Some say that the statue can help a home to sell much faster than it would otherwise. Others insist that it can even help to ensure a competitive price, no matter what the current state of the housing market.

Different sources recommend varying methods for burying the statue. Here’s a look at a few common, yet conflicting, instructions on where, and how to bury St. Joseph:

  • Upside down, near the ‘For Sale’ sign
  • Right side up
  • In the backyard
  • Lying on its back, pointing towards the house
  • Facing the house
  • Facing away from the house
  • Three feet away from the rear of the house
  • Exactly 12 inches deep

Once the home is sold, proponents say that the statue should be unburied, and given a place of honor in the new home.

While opinions vary widely on the effectiveness of this approach, it’s worth noting that, as is the case with many things, it seems to work best for those who are already convinced of the statue’s effectiveness.

But while there are believers, there are skeptics too, among them, Eckerd College student Aidan Murphy.

When Murphey’s father got a new job in Michigan and the family relocated, they buried a statue of Joseph at their home. Eight years later, though, the house has plunged in value but still hasn’t sold.

“My mom says, ‘St. Joseph doesn’t like us,’” Murphy recounts, “I personally think it’s because it’s a piece of plastic, and it is the home market system crashing in 2008 that has caused our misfortune.”

It’s also interesting to note that some of the websites that sell these statues also offer a complimentary home listing on their site, free with every purchase.

Other Myths and Legends

But it’s not just St. Joseph statues that are being used to sell homes, there’s a host of other superstitions that people hold to that influence their home buying, and selling decisions.

Take, for example, clients –or real estate agents who refuse to look at homes where someone has died. Or, what about prospective buyers who refuse to buy a home during certain astrological time periods? Then there’s the issue of numbers, with ‘13’ being a house or apartment number that many people will avoid. Some real estate agents will even try to avoid the number 13 popping up in an asking price, taking care to avoid listing prices of say, $113,000 or $213,000. Likewise, hotels and apartments will often skip the 13th floor altogether. Chinese buyers, on the other hand, are often leery of the number ‘4’, since this number is considered to be bad luck. On the other hand, ‘8’ is considered to be very lucky in Chinese culture.

Tips for Helping Your Home Sell Faster

Legends aside, though, there are a few things that every homeowner, or real estate agent, can do to help a home to sell faster. With this in mind, let’s have a look at a few proven ways to make a home more attractive to potential buyers.

  • Make Necessary Repairs and Upgrades-The first step towards ensuring that a home will sell faster, and for a more competitive price, is making all necessary repairs and upgrades. This means patching any holes in walls, replacing broken door knobs, and upgrading any worn out carpeting. This isn’t the time to do a complete remodel in the home, but making small yet important repairs and upgrades can have a significant difference when it comes to helping a home to sell more easily.
  • Clean, Clean, Clean-Next, you’ll want to ensure that the home is as clean as possible. This means clearing up anything that’s sitting around, and packing away many personal knickknacks –ensuring that countertops and other surfaces are clear and clean. In the same way, ensure that the outside is clean as well. Tidy up the yard, trim back bushes, clean the porch, and cut the grass.
  • Give It a Fresh Coat of Paint-Giving the walls a fresh coat of tasteful, neutral paint can help a home to feel lighter, cleaner, and more open. It will also help potential buyers to envision the rooms as their own.
  • Consider Staging-Staging a property is a vital, yet often-overlooked step in the sales process. This will help the home to look best in its photos, and also make it more appealing to prospective buyers who view the property in person. To stage your home, you can enlist the services of a professional home stager, or stage the home yourself. Important steps for staging include using smaller furniture to help the rooms feel bigger, removing all personal effects, and strategically placing art and accessories to add glamour and style to a room. You should also ensure that there’s adequate lighting, and make sure the fixtures are clean and up-to-date.
  • Pay Attention to the Kitchen-The kitchen is one of the most valuable rooms in a house. It is worth the most per square foot. Oftentimes, the kitchen can help to make or break a home buying decision. If your kitchen is in need of an upgrade, consider refacing your cabinetry, rather than replacing the entire cabinets themselves. Decluttering all of the surfaces, and placing a bowl of fruit or fresh flowers on the table can also help to add a fresh new look to your space.
  • Post Plenty of Pictures-According to a study by Trulia, listings with more than six pictures are twice as likely to be viewed by buyers, compared with listings with fewer than six pictures. Including plenty of pictures on your home listing is always a good idea –just make sure your photos look professional. Throw open the curtains to let in plenty of natural light, and make sure there’s no stray clutter or unmade beds in any of the photos.
  • Throw in Some Freebies-We all know about closing cost credits, but including some free items is another way to help to sweeten the deal, and differentiate your home from others on the market. Freebies like stainless steel kitchen appliances or a flat-screen TV are things that most potential buyers will appreciate.
  • Post Your Listing on Facebook-Facebook can help to facilitate connections, and it’s worth sharing your home on this social network as well. If you have 100-200 friends and your friends each have100-200, think of the potential to get the word out about your home.
  • Choose the Best Time to Sell-Before you list your home, think about the time of year that you’re selling. Your best chance of selling quickly is listing your property during a season when buyer demand is high. Spring is traditionally one of the best times to sell, and the market’s usually busy with potential buyers. Many families try to time their new home purchase with the end of the academic year at school, and the better weather will also help your home to look its best. Winter is often regarded as a difficult season to sell, if you’re planning a winter sale, you may want to consider putting your home on the market in the New Year, rather than during the holidays when people’s minds are on other things.
  • Price the Home Accurately-Finally, the most important factor when it comes to selling a home in a timely manner, is finding an accurate price point for it. The best way to set a realistic price for your home is by enlisting the services of local real estate agents. In some cases, an agent won’t even charge for a simple evaluation, and it may be worth checking with a few different agents to see which type of pricing they come up with. Remember: the highest valuations won’t necessarily equate with a quick sale. You can also check websites Zillow and Trulia for historical sold price data, to get an idea of what yours can sell for. Your goal is to find a price that will make your home appealing to buyers in the current housing market.

Finally, if you’re having trouble selling your home, and considering using a St. Joseph statue to sell your home, perhaps you’d be better served by seeking out a professional real estate agent. Real estate agents may not be patron saints, but they are experienced with selling homes and could be your secret to selling a lot faster.

For more information on home sales in Springs Colorado, contact Springs Homes today. We will work hard to help your home sell as quickly as possible, for a competitive price. You may also want to have a look at our guide to getting your home ready to sell.

Additional Resources:

Home Selling Myths: By Xavier De Buck

Preparing Your Home for a Quick Fall Sale: By Paul Sian

10 Really Smart Ideas About Selling A Home By Lynn Pineda

inspection

What You Need to Know About Appraisals

Congratulations, you have finally found the house you wanted! But you should ask yourself one question before signing all the paperwork, is the house you are planning to buy really worth the money you will invest? Can’t decide?

The asking price on the house is an amount which your lender has already approved, so you probably won’t have any issues with the mortgage. Actually, this is not always true, and there are instances in which you can have an issue getting a mortgage if the investment is not worth the approved amount. In such a case, the lender will provide you with a lower loan amount or none at all.

The situation may seem a bit complex, but this is exactly why you need a mortgage appraisal. Once you go through this process, you will find out the true worth of your house to be, and accordingly, you can make a decision on whether the purchase is a smart decision or not.

A home appraisal is a process in which an expert evaluates the house, performs a thorough analysis and then determines the worth of the home. The appraiser is hired by the lender through an Appraisal Management Company or the AMC, but you will have to bear the costs. Once the results have been prepared, they are reviewed, and accordingly, the deal is finalized.

The lender orders an appraisal when you have a house ‘under contract’. Your Realtor will establish a value of the house by performing a Comparative Market Analysis or CMA.  Negotiation is carried out on the offer and a written contract is prepared. If this is accepted, it is sent to your lender, who then gets in touch with an AMC and appoints an appraiser.

Purpose of an Appraisal

The main purpose of a mortgage appraisal is to determine the value of the house which you plan to buy. The process does incur fees, and you will have to pay them, but you should still get a home appraisal conducted considering the magnitude of the overall investment. By doing so, you will know that you are not paying an unfair amount of the property. Your lender will also be sure that they are not lending you excessive amounts, which may eventually lead to a foreclosure should you default on the mortgage.

In other words, a mortgage appraisal protects both you and the lender by ensuring that the deal you are about to finalize is indeed, worth the invested amount.

Types of Appraisals

A mortgage appraisal can be conducted by many methods, but two of them are popular. One is the sales comparison approach and the other is the cost approach.

The Sales Comparison Approach

In this method, the appraiser will compare the home with a number of other homes that are of the same size and located in the same locality. These are referred to as the comps or the comparables.  While comparing, many factors are considered such as the area, amounts of finished and unfinished space, age of the house, design features, kitchen styles, garages, fireplaces, and so on.

The Cost Approach

The Cost Approach method is primarily used to appraise new property. The appraiser will figure out an amount which will be required for reconstructing the home if it was completely destroyed. The analysis is also based on other things such as depreciation and land value. Accordingly, an appraiser determines the true worth of the house.

The Appraisal Process

When you decide the house which you want to buy, you get it under contract. This means that your Realtor performs a Market Comparative Analysis or CMA, and determines the value of the property. Using this, an offer is made and negotiated, and then a written contract is prepared. Once accepted, this is sent to your lender who then orders an appraisal through an AMC.

The appraiser will then visit the home to initiate the process. During that time, your presence is not mandatory but is still recommended so that you can get better insight.

Here are the main steps of the process.

  • The appraiser will perform a visual inspection of the home and assess its condition. He will note down details such as the construction quality, number of rooms, floor plan and the design. If there is any need of repairs or improvements, you will be notified and also provided with an estimate of the costs involved.
  • The appraiser will take photos of the property for record purposes, and conduct necessary measurements of the floors.
  • The appraiser will analyze the neighboring area and if any amenities are located nearby such as a park, shopping mall or hospital, they will determine their influence on the home’s worth.
  • The appraiser will get in touch with the local planning department or another governmental body, and determine the zoning rules and taxes for the property. This information can be used for figuring out the highest and best use, which serves as critical data in the home mortgage appraisal process.
  • All appraisers have access to a lot of data, which they get from agents and brokers. Using these resources, an appraiser will determine the average value of homes in the locality and go through recent sales report. In this step, the MLS and legal data of your chosen home is also reviewed.
  • The appraiser will then use any of the above methods to determine the worth of the home and will prepare a report. This will include a summary of the method, a review of the house’s conditions and the improvements that were carried out. The report will also contain details of problems such as cracked foundations and wet basements, a summary of market trends and their effect on the property and a complete analysis that will support the results. Maps, sketches, and photographs are also included for reference.
  • A copy of the report is sent to the lender.

The Appraisal Outcome

A home appraisal can have two results; the asking price is equal to or less than the appraised value or the asking price is more than the appraised value.

In the former case, the sale can proceed as per the plan. But what if the appraised value is lower than the amount which the seller demands? Should this be the case, the lender will not provide you with a big enough loan.

There are a number of options which you can take to deal with such a situation.

  • Negotiate with the seller and convince him to drop the price.
  • Pay the difference in amount yourself.
  • Have another appraiser go through the process one more time.
  • Forget about that home and search for another one.
inspection2

Your Inspection Rights and Approximate Costs

Finding that perfect home can be quite the task, but getting under contract begins a whole other process. Now that you and the sellers have agreed on a price, you would be wise to order a home inspection. Your Realtor can help by providing several choices for an inspector.

As a Buyer, you have the right to an inspection of the property prior to closing.  Once inspected, you then have the right to object to any conditions that are brought to your attention.  You may either ask the seller to fix them, or you may terminate the contract.  It’s important to know what to look for because, after closing, you own any problems with the property.  What many buyers don’t know is just how many inspections are available.   Below is a list of options you may want to consider before you close. Your choices will depend on the age, condition, and location of the home. Let’s cover just a few.

Home Inspection

The purpose of the home inspection is to determine the condition of your home. One usually runs between $300-$400. Price is based on age and size of your home and is pretty much a top to bottom inspection of the home. Be sure to ask your inspector what they include in the overall package.

Radon Test

The purpose of the radon test is to determine if your home has unsafe levels of radon gas within it. It is worth the extra money to determine if there are unsafe levels of radon seeping in from the ground. This test usually runs $130 and takes over 48 hours to complete.

Sewer Line Scope

The purpose of this test is to see if sewer lines are obstructed, cracked or outdated. You will want to make sure the line is working properly as the cost to repair and tap into the city main line can be very expensive. This test usually runs about $150 and most plumbers will provide a digital recording as your proof that it is working properly.

Lead-Based Paint Assessment

This test is a good idea for homes built prior to 1978 due to the fact that paint manufactured during that time contained lead. Lead poisoning could be potentially fatal to young children if swallowed. A test usually runs $300.

Meth Lab Test

If you think that your home was used to manufacture methamphetamine or it was disclosed to you that this has occurred, it is a good idea to order this test. One usually runs $600 for whole house or $1000 for specific area testing.

Mold Test

You can also see if your home contains dangerous mold which can form in basements or bathrooms and kitchens due to the high moisture content in those areas. This type of test usually runs $300.

The list of tests goes on but these are the most common and will address some major issues. Be sure to check with your lender if you are financing as they may be required in some cases. The main thing is to protect your investment and your family. You will be glad you spent the extra dollars should something be discovered that could be very expensive to repair.

*prices above are an estimate and may vary

rocks

Everything You Need to Know About Radon

You’ve found your home, you’ve written an offer, it’s been accepted and you are “Under Contract”. Now it’s time to find out what the real condition of this property is. In order to accomplish this you are going to want to do a Property Inspection. When you schedule the inspection, you should be asked to decide if you want the inspector to perform a radon test. In all but the rarest cases the answer should be yes.

What is Radon?

Radon is a naturally occurring, inert, odorless, colorless, radioactive gas. It is formed by the radioactive decay of uranium in rock, soil, and water. So, without a test, there is no way to know if your home has it.

What does it do?

Radon is right behind cigarettes as the second leading cause of lung cancer. Radon is associated with 15,000 to 22,000 lung cancer deaths in the United States annually.

Here is a good description, written by the National Cancer Institute of what Radon does to cause cancer.

Radon decays quickly, giving off tiny radioactive particles. When inhaled, these radioactive particles can damage the cells that line the lung. Long-term exposure to radon can lead to lung cancer, the only cancer proven to be associated with inhaling radon. There has been a suggestion of increased risk of leukemia associated with radon exposure in adults and children; however, the evidence is not conclusive.

Radon is actually a controversial topic and while there are many credible sources that question the effects radon has on human beings, the evidence and research that it is harmful is too overwhelming for us to ignore, especially when representing home buyers. Here is a list of organizations that state Radon is a health threat:

      • U.S. Surgeon General
      • American Medical Association
      • American Lung Association
      • Centers for Disease Control
      • National Cancer Institute
      • National Academy of Sciences
      • Environmental Protection Agency

Testing and Measuring

Here’s the science of radon, levels are measured and talked about in terms of “Picocuries” this is an international unit of radioactivity that is defined as 1 Ci = 3.7×1010 decays per second. This is approximately the activity of 1 gram of the radium isotope 226Ra, a substance studied by the pioneers of radiology, Pierre and Marie Curie, for whom the unit was named.

The important number to remember for the purposes of radon in a home is 4 pCi/L (picocuries per liter). This is the number above which the EPA recommends mitigation.

It’s important to note that we often hear about higher acceptable levels in other countries, the point being the US is “unreasonably” low. This might be the case but as far as the United States is concerned 4 pCi/L is the magic number.

Testing for Radon is important, especially here along the front range because radon is prevalent in the entire State of Colorado but especially high right here in El Paso County.

The Environmental Protection Agency (EPA) produces a “Radon Map”. This map categorizes areas into three zones to assess radon potential. All of El Paso County is in “Zone 1”

  • Zone 1- Highest Potential: These are counties that have a predicted average indoor radon screening level greater than 4 pCi/L (picocuries per liter)
  • Zone 2- Moderate Potential: These are counties that have a predicted average indoor radon screening level between 2 and 4 pCi/L
  • Zone 3- Low Potential: These are counties have a predicted average indoor radon screening level less than 2 pCi/L

The criteria used to develop this assessment are as follows:

      1. Indoor radon measurements
      2. Geology
      3. Aerial radioactivity
      4. Soil permeability
      5. Foundation type

As far as testing methods are concerned, most certified home inspectors will use a handful of different testing methods. Some require post inspection processing therefore requiring a wait to see the results. It’s important to keep track of your inspection deadlines, you don’t want to end up with elevated radon levels but ask for mitigation after your inspection objection deadline.

How does radon get into a house

The primary entry point for radon into the home is through the foundation. If you have a basement, the gas can seep through small cracks and voids in the slab. Crawl Spaces are generally left uncovered thus providing no barrier for radon gases. Sometimes radon enters the home through well water.

Mitigation

There are a handful of different methods used to mitigate radon from a home. The most popular method here along the front range of Colorado is Active soil depressurization (ASD).

Active soil depressurization (ASD) essentially keeps radon gas from entering the home by changing the pressure differential, essentially depressurizing the force that pushes the gas from below the foundation slab or crawlspace into the home. Radon is drawn from beneath the slab by an exhaust fan that vents the radon gas through a PVC pipe up and over the roof of the home to the outdoor air where it dilutes into the atmosphere.

It’s important that radon mitigation systems vent above the properties roof. Since radon gas is heavier than air the possibility exists that the gas can be picked up and redistributed through the homes HVAC system. By venting above the roof the concentration of gas falls off significantly before it has the opportunity to be reintroduced.

It’s important to note that the active soil depressurization system is a separate system and is not related to your homes HVAC or any other system except that it draws a slight low voltage feed from your electric system. So, the cost to operate an ASD system is low as well. The system fans typically use 90 watts per fan. The cost to operate one of these units is approximately $25 to $45 per year.

The cost of installation varies based on the size of the home and the type of foundation. Here along the front Range of Colorado, systems run from $800 on the low end to $2,500 on the high end. Newer homes with perimeter drains tend to be easier for installation of mitigation systems and therefore cost less.

We test for radon during the inspection because it’s generally something we want the seller to pay for. In some cases the buyer may be willing to accept the cost of mitigation, this generally has to do with the purchase price and terms.

If the seller ends up installing the system it’s important to get documentation about who installed the system what the numbers look like on the retest and what the warranty is. All of this should be wrapped up prior to closing.

Frequently Asked Questions about radon:

Can radon levels change over time?

    • Yes, changes in temperature, Moisture and Dryness can cause the uranium levels to rise which results in an increase in radon levels. If the ground around your home becomes saturated, frozen or covered with snow, it keeps the radon in the ground not allowing it to escape. Wind can also change the pressure around your home, which could cause radon to diffuse into your home. It is recommended not to test during severe weather or high winds.

How often should we test?

    • If you have a system in your homes the EPA and IEMA recommend that you test every two years. How long do Mitigation Systems Last? Usually, the manufacturer warrants the fan for 5 years. The national average for the life of a fan is 11 years. Some last as long as 20 years.

Should we test for radon if a mitigation system is present?

    • Yes, if it has been 2 years since it was installed.

What is the cost of operating a mitigation system?

    • $25-$45 a year.

What is a Picocurie?

    • This is an international unit of radioactivity that is defined as 1 Ci = 3.7×1010 decays per second. This is approximately the activity of 1 gram of the radium isotope 226Ra, a substance studied by the pioneers of radiology, Pierre Curie and Marie, for whom the unit was named.

What’s the fastest way to test?

      • The quickest way to test is with a short-term test. These kits remain in your home for two days to 90 days, depending on the device.

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